We win some help
THE DETAIL of the help available from the UK government to workers affected by the covid-19 pandemic changes every other day. The Treasury in particular has grown accustomed to announcing rewrites of the rules at 5pm on Fridays. The Friday we posted this was no exception.
Here we present a running summary of what's available to freelances. If you spot something missing, please email firstname.lastname@example.org now.
- If you're a traditional freelance
- If your work is paid PAYE
- If you have a limited company
- Loans - low or zero interest
- Universal Credit and other benefits
- Community support and more
- Outside the UK?
All freelances who have mortgages can apply to defer payments. Doing so would of course mean increased payments later, or payments for considerably longer. You can also request payment holidays on credit cards and many types of loan, and on rent-to-own schemes (hire purchase).
5 June 2020
The government today announced that there will be no eviction hearings for tenants before 1 September. Housing charity Shelter said the government must change the law to prevent a "tidal wave of homelessness after the end of August".
1. If you’re a traditional freelance
A "traditional freelance" is our attempt at shorthand for someone who strives to make a living by selling work, or licences to use work, by the word, the image, the hour, the day or similarly. For these purposes it does not include people who are paid through the Pay As You Earn (PAYE) system - see below.
The good news is:
- Established freelances can now apply for a grant from the Self-Employment Income Support Scheme (SEISS);
- The amount can be 80 per cent of the average "profit" you declared to Her Majesty's Revenue and Customs (HMRC) over the past three years;
- Payments will be deemed to cover March to May;
- Payments are independent of actual loss. You do not have to stop working;
- HMRC should have contacted you to invite you to apply; and
- HMRC may have informed you of the earliest date on which you could claim. The deadline for making the first claim was 13 July and the deadline for claiming the second slice (whether or not you claimed the first) is 19 October.
The bad news includes:
- If you have not filed a self-employed tax return for the tax years 2018 to 2019 you get no grant;
- If you only have a few months' self-employment on your 2018/19 return, this income will be counted as your profit for the whole year;
- Grants will be available only to people who got more than half their income from freelancing - so if 51 per cent of your income came from shifts paid Pay As You Earn (PAYE) and 49 per cent from pure freelancing, you will get no SEISS grant;
- The conditions for receiving a SEISS payment are that you must;
- carry on a trade the business of which has been adversely affected by reason of circumstances arising as a result of coronavirus or coronavirus disease,
- have delivered a tax return for a relevant tax year on or before 23 April 2020,
- have carried on a trade in the tax years 2018-19 and 2019-20, and
- intend to continue to carry on a trade in the tax year 2020-21...
- When this is all over any grants you receive will be counted as taxable income.
In this context it seems that "profit" refers to the number in the box on your income tax return that calculates your turnover minus allowable expenses.
There is an eligibility checker on the gov.uk website: you need your 10-digit tax reference number and your National Insurance number.
When on 12 May the Chancellor announced an extension of the furlough scheme (below) the NUJ's General Secretary Michelle Stanistreet wrote to the Chancellor of the Exchequer calling for "urgent action over the many gaps in provision" for freelances, as part of a #ForgottenFreelances campaign.
In an online question and answer session on 22 May the Chancellor was hesitant about extending support for SEISS. The NUJ continued to push for an extension. On 29 May cross-party group of 113 MPs wrote to the Chancellor calling on him to extend SEISS beyond the end of the month.
Later on 29 May the deadline for applying for the first SEISS slice was set: 13 July.
At some time in August freelances will be able to apply for a second SEISS payment, of only 70 per cent of your assessed "profit" (up to £2190 a month) for June, July and August. You will be able to apply for this whether or not you went for the first grant. The deadl
6 July 2020
Applications for the second SEISS slice are due to open on Monday 17 August.
6 June 2020
Warning: Before applying for the second, smaller slice of SEISS do consider your position with Universal Credit. See below.
17 August 2020
Applications for the second SEISS slice indeed opened today. You may well have been sent a date on which you should apply. You can apply at any time after that date, up to 19 October 2020. Do so here: "Claim a grant through SEISS".
You can apply whether or not you got the first SEISS slice. See also this update from MoneySavingExpert.
5 June 2020
The NUJ has produced a template letter to HMRC to appeal against a decision that you are ineligible for the SEISS scheme due to your PAYE income. It challenges the regulations the government has put in place:
I ask HMRC to review the decision in my case that the PAYE income and tax that has been paid is not "employee" income because at no time have I been an employee or anything other than genuinely self-employed...
2. If you do regular shifts, paid PAYE
Freelances paid PAYE are excluded from SEISS (above). The government has guaranteed 80 per cent of salaries for employees who are "furloughed", up to a maximum of £2500 a month.
BBC Studios has shown best practice by promising to include those on fixed-term contracts and freelances paid PAYE in this scheme. Other companies have not. The BBC itself cannot access the furlough scheme but has set up a Covid-19 hardship fund. (Clarification 09/06/20)
24 July 2020
The BBC has announced it will extend its offer of support matching the furlough scheme - to include 649 PAYE freelances who have worked for the corporation every month for the last year but had no bookings or reduced bookings during the lockdown. The PAYE freelances affected will receive their average earnings for March, April and May and the payments will be capped at £2500. For details see NUJ backs new BBC offer to support PAYE freelances.
The NUJ's Freelance Office can offer advice on contractual matters and cancelled work: contact details are here. They have had some success in persuading companies to apply for the funding to furlough casual workers.
Some companies may still not know that they can apply to furlough workers - not just employees - who were on their payroll on 19 March. There is also provision for company office holders and for those who work through agencies. See here for the full government advice and the formal direction from the Treasury.
On 12 May 2020 the furlough scheme was again extended to the end of October, with details to come later (see below) of measures to allow for furloughed workers to work part-time and require employers to pay an unspecified share of the 80 per cent of previous PAYE earnings that continues to be guaranteed to those workers. Clearly, when employers get this announcement they will fire up their spreadsheets and make decisions on costs...
30 May 2020
Later on 29 May the Chancellor announced that the furlough scheme will close on 31 October. Firms will have to pay furloughed workers 80 per cent of their pre-furlough earnings until then. From 1 September, firms will have to chip in: the government will pay them only 70 per cent of pre-furlough earnings, and from 1 October only 60 per cent.
(Apologies: the first version of this update was based on a confusing, or confused, BBC report.)
26 June 2020
The Treasury has broken a run of 5pm-on-a-Friday announcements by publishing Directions on the new Flexible Furlough scheme in mid-afternoon (PDF here). Generally speaking, someone who has been completely furloughed for three weeks may, with effect from 10 June, be asked to agree to work part-time, and the government will continue to pay a portion of their salary for the time they are still not working.
3 July 2020
The above Directions state that employers may apply for furlough payments until 31 July, in respect of payments made up to 30 June.
23 September 2020
The NUJ was investigating a legal challenge to the exclusion of many freelances from SEISS, such as those paid PAYE and those with "service companies" as below. The Freelance understands that this has turned out not to be possible.
3. If you have a limited company
Many freelances have been forced to register themselves as limited companies, some due to clients' superstition over "IR35" rules. A few chose to do so when the tax on income taken as a dividend from the company was lower than that on income taken as salary.
Self-employed limited company directors can be furloughed as employees of the company - only on their salary paid PAYE. They can't then work for the company, but can continue to perform their statutory obligations as directors - which would include effort to claim the support for the employee's pay. Earnings that they took as dividends do not count. Treasury guidance issued on 15 April specifies that you (director) must agree in writing with you (employee) that you are on furlough.
In his online question and answer session on 22 May the Chancellor seemed to say that government databases simply couldn't cope with replacing dividend income for freelances.
Government small business bounce back loans have been launched and can be used to support your income.
They could be useful to those with no other support - such as newly self-employed people. From moneysavingexpert.com: "Since Monday 4 May, the new 100 per cent state-backed bounce back loans, for amounts between £2000 and £50,000, have been available. They're interest- and payment-free in the first year - so pay it off then and it's no cost, and at a very low 2.5 per cent annual interest after that - they're set up to repay over six years." Fourteen banks had announced plans to offer these loans by 14:00 on Friday 29 May - see the moneysavingexpert page for an updated list.
The Freelance would under normal circumstances advise getting professional financial advice before taking out a loan.
5. Universal Credit and other benefits
It may be worth trying to claim Statutory Sick Pay at £94.25 a week, backdatable to 13 March. For what it's worth, it is now payable from the first day that you need to self-isolate.
Everyone left out by the measures reported above - and who does not already claim another benefit - can apply for Universal Credit. The rules for this have been "relaxed" - but there are massive backlogs in a system that the Freelance believes was designed in the first place to deter and delay claims.
You can apply for both SEISS and Universal Credit. If you get SEISS it will be counted as income and your UC payments will be reduced; but it will often be worth joining the queue for both.
Warning: The BBC reports people who were receiving Working Tax Credit having it cancelled when they started an application for Universal Credit. They did not even complete that application, because they were concerned that their savings would make them ineligible. So if you receive Working Tax Credit or any other "legacy" benefit - take great care.
6 June 2020
The Lord giveth and the Lord taketh away
Warning: OpenDemocracy points out today how complicated are the effects of SEISS payments on entitlement to Universal Credit. Under the UV "surplus earnings rules" a SEISS lump sum can entirely disqualify you for benefits in the month in which it is received (or maybe reduce it in subsequent months - we're checking).
Especially if you expect your income to be seriously reduced for some months, we strongly recommend that before you apply for the second SEISS slice you use the moneysavingexpert.com benefits calculator to check what the effect will be.
We tried it for the case of a single person aged 40 paying £300 a week in rent whose income has completely stopped and who received a first SEISS slice of £4000 this week. It told us that they would receive no universal credit in June or July - and £1284.16 per month from August. But that's less than the rent! What did we do wrong? You need to check with your own figures.
6 July 2020
The government has updated this advice page to reflect this: "even if [your Universal Credit] claim is not approved it will affect your tax credits if you claim them, and may affect other benefits".
The "monthly standard allowance" for Universal Credit (UC) is £409.89 [increased from £317.82 pre-coronavirus] for a single person over 25 and more if you have children, have a disability or "need help paying your rent". In response to coronavirus, the government is waiving the "minimum income floor" - the level of monthly earnings that UC simply assumes - from 6 April. The "floor" affected what self-employed were entitled to.
Only those who have illnesses or disabilities that affect their ability to work can get the old Employment and Support Allowance (ESA). This is £73.10 a week for the over-25s.
The NUJ and sister unions pressed for the rules on savings affecting eligibility for Universal Credit to be relaxed for the duration. Instead, we got an accounting clarification. To quote moneysavingexpert.com again: "We've checked with Department for Work & Pensions, who confirmed that while they'd expect business savings to be in a business account, nevertheless 'if someone has money in their personal account to be used for business purposes, it won't be counted towards their capital'."
If your household has more than £6000 of savings that are NOT provably earmarked for such purposes, your UC entitlement starts to reduce. While you have £16,000, you get nothing. It would seem that, if you need to claim Universal Credit, you should simply declare the savings which are "truly personal".
6. Community support and more
Mutual aid networks are being set up at street or neighbourhood level to help with shopping, picking up prescriptions and dog walking. Operating by email, Facebook and WhatsApp, they will have the word "mutual aid" in their title. Look out for flyers coming through your door or posted in shop windows locally.
7. Outside the UK?
See here for brief notes on support for members who live outside the UK.